By Tyler Bauer
It’s been a doom-and-gloom weekend of economic blogs. First, I wrote on what’s wrong with the stock market. Now, I’m writing about President Trump’s failed tariffs. And yes, I think it’s fair to officially say they have failed.
Until recently, much of the talk about implementing tariffs was hypothetical. However, it is now real, with the US and China beginning an apparent trade war. At midnight EDT on Friday morning, President Trump’s 25% duties on $34 billion worth of Chinese goods – including water boilers, x-ray machine components, airplane tires, and more – went into effect. China immediately responded with its own tariffs on $34 billion worth of American goods, such as soybeans, pork, and electric vehicles. China has hailed this step as “the biggest trade war in history,” and they might be right. The damage from the trade war with China is no longer hypothetical – American soybean producers are already being punished by China. This is not insignificant, as one-third of soybeans grown in America are sent to China every year. With American soybeans now more expensive in China, other producers will benefit. Interestingly, China’s tariffs on soybeans and pork are directly hitting Trump supporters in America’s heartland, so these tariffs may have a direct effect on President Trump’s approval rating and reelection chances in addition to their effect on the economy.
China isn’t the only trading partner placing retaliatory tariffs on American goods. Mexico recently implemented their second round of retaliatory tariffs, this time on goods such as apples, cranberries, cheeses, and steel products. Much like the Chinese retaliatory tariffs, these will target Trump supporters in the heartland, as well as Trump supporters in the steel industry (see my article on President Trump’s attempt to support the steel industry here). According to Mexico, both rounds of their retaliatory tariffs will remain in place until President Trump removes American tariffs on Mexican steel and aluminum.
As if this wasn’t bad enough, things could actually get much, much worse. President Trump wants to place tariffs on imported cars, preferring that European manufacturers such as BMW build cars here rather than in Europe. Reason rightly pointed out that BMW already builds cars here, but President Trump isn’t one to do research. If President Trump does place tariffs on imported automobiles, BMW intends to leave the United States. BMW’s American production employs roughly 9,000 people in Spartanburg, South Carolina, so this would be a significant blow to the American workforce.
Not only do President Trump’s proposed tariffs restrict imported cars, but his current tariffs could continue to force American automobile manufacturers to go elsewhere. Harley Davidson has already moved some production overseas, and Polaris could soon follow. This comes in the wake of Trade Partnership, a pro-trade think tank, and the White House reporting that President Trump’s tariffs would result in a loss of over 100,000 jobs, increased prices, and slowed economic growth.
I have never been a believer in using tariffs. Some claimed President Trump was only using the threat of tariffs as leverage, but now the effects are becoming real and proving to be costly. I wish we didn’t have to learn the hard way, but it’s about time we learn that tariffs are bad. When free trade occurs, everyone benefits. I believe people should be able to buy and sell goods and services with whomever they please, regardless of whether they are separated by borders. It’s the most beneficial form of trade, and it’s the only way to remain a free person.